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Thursday, 16 February 2017

AMCON Makes Shocking Revelations Over Arik Air indebtedness’

The
ragging controversies trailing the action of Arik Air take over by (AMCON) took a new turn as Asset Management Corporation of Nigeria (AMCON) made more shocking
revelations about the financial state of the leading airline in the country.

AMCON had, last Thursday, announced
the takeover and sack of the management of Arik Air, replacing it with a new
one headed by Captain Roy Ukpebo Ilegbodu, a veteran aviation expert, under the
receivership of Mr. Oluseye Opasanya (SAN), who would now manage Arik Airline.

Managing Director of AMCON, Mr.
Ahmed Kuru, who briefed members of the Committee on Banking, Insurance and
other Financial Institutions, yesterday, said contrary to earlier claims, Arik
owes AMCON N147 billion.

He said the airline also owed other
local banks at least N165 billion, while the foreign debts stand at $81
million.

The AMCON boss also told the
committee members that Arik owed over 2,000 staff seven months’ salary arrears,
revealing that negotiations were currently ongoing on how to immediately resolve
the arrears.

He disclosed that the airline,
despite having 30 aircraft, only operates 10.

According to him, the distress in
Arik was so bad that the airline relied on collection of ticket fees before it
could buy aviation fuel, adding that the incessant cancellation and delay of
flights were as a result of the airline’s inability to buy aviation fuel.

Kuru, while dismissing claims that
the Federal Government was planning to make Arik a national carrier, said the
airline was too problematic for any government to handle.

He said: “Despite all the things we
have done to ensure that Arik Air stays in business, they have not done their
part in meeting their own obligations. Arik Air owes up to seven months
salaries to workers.

“They have refused to pay salaries
and also refused to ensure that their loans are repaid. We could not just sit
back and allow an important airline with about 30 aircraft that covers 55 per
cent of all routes in Nigeria to go down. From the records, Arik makes over N7
billion annually.

“We are talking to people to
acquire the airline. They came, but when they saw the records, they decided to
suspend everything, pending when we resolve some of the issues.

“We have deployed people there to
manage it, pending when we can stabilise it and then bring in investors to take
over. We discovered that, out of the 30 aircraft of the airline, only about 10
were functional. Some of them were not in Nigeria. They failed to meet all
their obligations, even the insurance payment. They did not even have money to
buy aviation fuel.

“What they did was to collect money
for tickets and then quickly use it to buy fuel. This is how they ran the place
and these were some of the things we met on ground.

“The first thing we did when we
moved in was to address the payment of salaries of staff. Remember, some of
them were owed for up to seven months. The staffs of the airline are very pleased
with what we have done.”

Kuru expressed hope that with an
annual profit of about N7 billion, the new Arik management could pay back the
loans in time. “AMCON debt is about N147 billion. There are local banks, which
Arik Air owes about N165 billion. These banks collect all the monies they
make,” he said.

On the rumour that the Federal
Government plans to convert the airline to a national carrier, Kuru said this
was not on the table. According to him, “ Arik is too complicated to make a
national carrier. The total asset worth of the airline right now is less than
N40 billion.

“Government does not have plans to
do that. The interest of government is for the airline to continue flying and
for people to work and earn their living. They have over 2,000 staff.”

On what would be needed to
stabilise Arik, the AMCON boss said about
N10 billion was enough. He said: “Within the next three months, they
will be able to pay back what we have put in right now. In national interest,
Arik Air should be allowed to fly.”

Kuru said, in the next two to three
weeks, the new management of the airline would put 15 to 16 aircraft back to
the 18 nationwide routes, noting, however: “Arik Air cannot compete
internationally now. They can’t give the kind of services other airlines have.”

He also spoke on the suspension of
international flights, noting that the airline spends N1.6 billion on aviation
fuel to service its 12 international destinations, which it cannot do
currently.

He said: “We are thinking of
suspending international flights. Arik Air needs about N1.6 billion to buy fuel
for international routes. We cannot do that right now. By the time we manage it
for about six months and the airline can survive, we can sit down and talk
about where to go from there.

“Based on what we have achieved in
just one week, we are hopeful that in the next three weeks, delayed or
cancelled flights will be things of the past.

“We are carrying everybody along.
At the end of the day, we want to return it to profitability. We need to
emphasise one fact that the only way we can recover our debts is for Arik
Airline to continue to fly. The banks have come to realise that this is
important.

“Government has a responsibility to
ensure that it intervenes whenever there is any threat to national interest.
Within the next 30 days, we will be going to places we have not been, in the
last three years.”

On their part, the lawmakers lauded
the initiative of AMCON, but noted that it acted belatedly.

Chairman of the committee, Senator
Rafui Ibrahim, who spoke on behalf of other lawmakers, said: “Was the takeover
not done rather too late? From what you have given us, this is worse than
Dasukigate. It appears what is happening in the private sector is worse than
that of the public sector.”